Forex Trading usually is done with leverage, here're examples comparing leverage.
Equity required to trade a standard lot of AUDUSD would be AUD$100,000 converted to USD.
Assuming 1 pip rise in price, aka 0.01%, aka 0.0001 change in price, will result calculate as $100,000 * 0.01% profit. Profit = AUD$10 - SWAPs.
Or simply 1 pip = $10 of the base currency
Therefore, Return is AUD$10 / AUD$100,000 = 0.01% (Or simply, 1 pip).
Return Fomula without Leverage is therefore:
Return = 1 pip * 1 = 0.01% = 0.0001 (p_change * 1)
The 1 means 1:1 Leverage, or no leverage.
Let's assume the following:
Leverage: 400
Equity required to trade a standard lot of AUDUSD would be AUD$100,000 / 400, or AUD$250 converted to USD.
Assuming 1 pip rise in price, aka 0.01%, aka 0.0001 change in price, will result calculate as $100,000 * 0.01% profit. Profit = AUD$10 - SWAPs.
Or simply 1 pip = $10 of the base currency
Therefore, Return Fomula with Leverage is AUD$10 / AUD$250 = 4% (or simply, 400 pip).
Return Fomula without Leverage is therefore:
Return = 1 pip * 400 = 4% = 0.04 (p_change * 400)
The 400 means 1:400 Leverage.